ALEX BRUMMER: Cutting a pension deal with Tata could be green light to other investors in UK to try similar ploys

Sir Philip Green is not the only business owner who thinks he can win a better deal for pensioners outside the straitjacket of the Pension Protection Fund.

Tata Steel and the trustees of the British Steel Pension Scheme, which has a deficit of £485m, are of the same view. Indeed, in the case of Tata Steel the enterprise appears to regard resolving the pension fund liabilities as precursor to a trans-European deal.

The transaction in sight is with Germany’s ThyssenKrupp, which potentially could preserve steel making at the state-of-the-art blast furnace in Port Talbot.

Undermining workers: There is something distasteful about a wealthy inward investor into Britain using the pension fund as a bargaining chip in a negotiation with the Government

One can understand both Green’s reservations about dumping money in the PPF and Tata’s desire not to be seen walking away from its obligations by doing the same.

If pensioners are tipped into the PPF they must all take a 10 per cent haircut and upper income pensioners will see their benefits cut to just over £37,000.

Green’s preferred option is to buy out the smaller pots and inject a chunk of cash, perhaps as much as £250m, into the scheme for longer-serving employees. Tata Steel seems ready to keep funding the British Steel scheme if it can persuade the Government, the regulators and the trustees to change the terms of the plan so that inflation adjustment for retirees is switched from the retail prices index (RPI) to the consumer prices index (CPI).

Such off-the-shelf deals may on the surface seem like a great idea, especially if they appear to secure higher incomes for existing and future pensioners. But matters aren’t as simple.

Pensions are a long tail affair and some of the liabilities will not materialise for 20, 30 or even 40 years. There can be no security that a deal done in 2016 will be adhered to by future owners, or that European steel making or the fast fashion of Topshop will last the distance. Moreover, following the Bank of England’s August cut in bank rate to 0.25 per cent, deficits are ballooning.

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Associated British Foods (ABF), owner of Primark and a family-controlled enterprise which takes corporate responsibility seriously, has revealed its closed final salary pension fund has a £200m deficit.

Tata Steel’s efforts to rid itself of some of the burden of the pension fund, and get on with restructuring its European business, are understandable. But we shouldn’t forget that Tata Steel, though an independently quoted enterprise, is partly owned by one of the richest groups of companies in the world, including high-performance Jaguar Land Rover.

There is something distasteful about such a wealthy inward investor into Britain using the pension fund as a bargaining chip in a negotiation with the Government about a strategic industry.

Cutting a deal with Tata could be a green light to other investors in the UK to try similar ploys, weakening the social contract between corporations and their workforce and damaging trust in pensions saving. A group with Tata’s global resources should not be allowed to dump pensioners into the PPF nor should it be allowed to write its own rules.

It needs to be a good corporate citizen and write an unconditional cheque.

FTSE exodus

Sterling softness was always going to make British companies vulnerable to overseas takeovers. Investors in Premier Farnell have waved off the maker of the Raspberry-Pi computer, bought by US digital giant Avnet.

Meanwhile, the board of British private equity outfit SVG Capital, once the venture capital arm of Schroders, is facing an all- cash £1bn offer from Boston-based HarbourVest Partners.

There is little chance of resistance from SVG, founded by Nicholas Ferguson, as the American buyer has snapped up 8.5 per cent of the shares in the market and claims backing from investors holding a further 43 per cent of the shares. If untied investors decide to reject HarbourVest they might risk being left in a rump minority.

The passage of SVG to HarbourVest hardly rates alongside the sale of ARM or even Premier Farnell as a loss to Britain’s digital future. Nevertheless, a quoted UK private equity house is a useful part of the financing chain, and is certain to see its UK focus weakened by an American takeover, largely driven by get-rich-quick opportunism.

If Theresa May is not careful, Britain’s tech and financial sectors will be seriously denuded before she delivers on slowing the wheels of overseas takeovers. Why are we waiting?

Shafik squeeze

The departure of Minouche Shafik as a deputy governor of the Bank of England after just two years in the job will be a big disappointment for governor Mark Carney.

Shafik was brought in to help clean up the market behaviour after foul play in setting Libor interest rates and on the foreign exchanges. Among other things, she produced a landmark report on fair and effective markets. But there was always the impression that Shafik was having to squeeze into a narrow space occupied by the other deputy governors and the Financial Stability Committee.

As LSE director she will have more room to manoeuvre. She should beware Libyan leaders and other rogues bearing gifts.

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ALEX BRUMMER: Cutting a pension deal with Tata could be green light to other investors in UK to try similar ploys